BBC chairman will oversee reforms to win back public trust

The BBC's chairman yesterday hit back at critics of his handling of the crisis in public trust that has enveloped the broadcaster in recent months. But he admitted the corporation faced a "big challenge" to win back the confidence of licence fee payers and warned senior executives they would be fired if measures to tackle deception did not bear fruit.

In an interview to mark his eventful first 100 days as chairman, Sir Michael Lyons also revealed he had ordered an audit of the new measures and would team up with media regulator Ofcom to hold a wide-ranging summit on the topic this year. He also refused to rule out radical surgery on the BBC, including the closure of entire channels or services, as the trust examines management plans to reallocate funds in the wake of a lower than hoped for licence fee settlement.

Sir Michael said the director general's plans to tackle the crisis in trust, sparked by revelations over fake competition winners on programmes including Children in Need and the misleading editing of a BBC1 documentary on the Queen, had not gone far enough. "We're pleased to endorse the plan of action brought forward by Mark Thompson but even then we feel it didn't go far enough," he said.

"We've added an examination of the structures, into whether supervision is good enough at the BBC, and asked him to look very carefully at practices at other broadcasters in terms of compliance. Just because the BBC does it this way, doesn't mean it's best practice."

Sir Michael, who was appointed in April, said he was "disappointed" that the problems had not emerged during an earlier trawl of the BBC's programmes and admitted it was "likely" other problems would come to light.

Former BBC News executive Ron Neil will be asked to expand a previously announced investigation into the BBC's use of premium phone lines into a broader review. He will provide running commentary to the trust on the changes introduced by management and produce a full report by Easter next year on whether they were working. Mr Neil earlier conducted a post-Hutton review of the BBC's journalism that Sir Michael called "impressive".

It was against this framework that Mr Thompson and his fellow senior executives would be judged in a year's time, said Sir Michael.

A Guardian/ICM poll recently revealed that 59% of viewers trusted the BBC less than before and Sir Michael admitted it was "a big challenge for the BBC to restore and improve that situation".

He added: "We know from our own research that, before these incidents, trust in the BBC is higher than other broadcasters and higher than many other institutions in this country. That's a fantastic position to have and we've got to get back to that, for sure."

Sir Michael, a former Birmingham council chief executive appointed as chairman in the wake of the shock departure of Michael Grade for ITV, said he would not shirk from demanding resignations if the situation did not improve.

But he added that he had "complete confidence" in Mr Thompson's ability to "get it right" at a time when all public service broadcasters are under siege following a series of scandals. He admitted that the controversy over footage of the Queen apparently showing her storming out of a photoshoot, for which independent producer RDF has taken responsibility, would "play into all sorts of fears that this is symptomatic of the BBC chasing extra viewers and moving away from its core mission", but added: "The trust is clear there can be no suggestion of that."

The trust would also conduct research into the public's expectations, he said.

"Do people have different expectations from a piece of fiction to the news or a documentary? I think they do. And what do you do in that grey area in the middle where you've got mockumentaries and fictionalised history and so on. What are the standards that should prevail there?"

He also criticised recent attempts to re-open the debate over the best governance structure for the BBC. A recent report from the House of Lords communications committee said the powers of the trust were too vague and the BBC lacked anyone to stand up for it in a crisis. But Sir Michael said: "Those people who have been arguing that what the BBC needs at this stage is a flag-waving chairman, what planet do they live on? Have they been around in recent years?"

He said the trust would be better placed to stand up to opposition from government and commercial rivals if it didn't "softsoap" the situation when things were "manifestly wrong".

He said the debate on the structure was over and critics should "move on". "No structure is perfect," he said. "I've spent a number of years looking at structures in companies, local authorities and government departments. It is a forlorn hope to think you can solve all the problems by restructuring. It is a British illness."

Of the broader debate over reallocating the BBC's £3bn annual budget to prepare it for the digital age, he said: "The BBC shouldn't do any more than it can do well and if it can't do well everything it is trying to do, it should do less."